Slammed! Why Healthscope Ltd shares plummeted 17% today

Hold onto your socks Healthscope Ltd (ASX: HSO) shareholders!

Shares of the private hospital owner and operator have been absolutely hammered today, falling as much as 26.6%. They hit a low of $2.15 this morning, but have since regained some respectability to trade 16.9% lower at $2.435 at the time of writing.

Shareholders might want to look away now…

Source: Google Finance

Source: Google Finance

Notably, Healthscope’s rival Ramsay Health Care Limited (ASX: RHC) shares have also fallen 4.8% so far.

The catalyst behind Healthscope’s fall from grace this morning was a market update provided ahead of the group’s Annual General Meeting. It said it had experienced slower-than-expected revenue growth in Hospitals during the first quarter of financial year 2017.

It also warned that group operating earnings before interest, taxes, depreciation and amortisation (EBITDA) would likely be flat year-on-year if the recent trading trends were to continue.

You can read more about the update, here.

Prior to this morning’s update, Healthscope’s shares were trading at a rather lofty 27.9x trailing earnings. As such, a sell-off was to be expected for a poor earnings update, although some investors may find an opportunity to buy if the shares do fall much further.

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Motley Fool contributor Ryan Newman has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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